Incentive Ceiling

As someone who has taught economics for 28 of the last 33 years, I thought I had pretty much seen everything a student could come up with in an introductory course in which the issue was rent control. What I'm about to share is not a new concept or a new analytic result, but simply an inspired way of saying an old result.

In response to a question about rent control, one of my students, Preston Rackauskas, referred to a rent ceiling as an "incentive ceiling." Sweet.

A less snarky and more meaningful comment might have been: "Based on the books I've read, I've seen that phrased used before - perhaps the student has been doing some reading outside of class?"

or "I don't really think it's an "incentive ceiling" - philosophically, and based on the evidence, rent control seems to create all sorts of innovative solutions to "route around the control". That is to say, it creates incentives to look for loopholes and exploit grey areas.

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